Social Security - 62, 66 or 70?

[KiotiKowboy]

As Moss Road says in Post #4, when you die your wife gets your SS in lieu of hers, if yours is larger.

Buy life insurance before you turn 60 to keep the premiums reasonable. I think I'm paying about $125 mth for $250K policy.

 

[CurlyDave]

For those of you retired, what do you think? What did you do?

Take it at 62, 66 or 70? I put together a spreadsheet and if I take it at 62 the break even point vs 66 is age 72 and 80 for taking it at 70.

If I live to be Older than 80 then it works out better to wait until I'm 70...but, you never know. I guess it comes down to the government betting that I'm going to croak younger than I think that I am. That's why they want you to wait, hoping you won't collect as long.

What experience can you guys lend to the thought process?

Did you include the "time value of money" in your spreadsheet.

Funny thing about that, when you owe the IRS money it knows all about time value, and charges you interest on late payments. But when SS is going to pay you something they conveniently forget to consider this.

My spreadsheet allowed for various interest rates. Any interest rate at all pushes the break-even point out further, and, from memory, a rate of ~ 8% led to there being no break even point. Essentially, I could live to 1000 years and I would always be better off taking SS earlier. Since the long-term average stock market returns are in the 10-11% range, there is no reason for me to wait.

I retired and took SS at 62, and have never regretted it.

There are two other big advantages of taking SS earlier: 1. The money I spend is the government's money. Mine stays in my IRA. I would far rather have money in an account with my name on it than in the government's account.

2. I believe it is politically impossible to reduce a SS payment once it has been started. While I am fortunate to be in a situation where if the government means tested SS my payment would be substantially reduced, I would not like this at all. By taking it early, I am pretty certain that future events will not reduce my payment.

 

[sixdogs]

Oh, by all means take the money at 62. This your money that you and your employer contributed equally for your benefit. It's yours, take it and the math is on your side. If by some chance you live into your middle 80's and optimistic return assumptions are realized, you'll cross the point where waiting might have been better. At that point you won't have a tractor--or any gumption-- and will likely be eating meal on wheels so it won't matter much anyway. CurlyDave is right...take the money and run.

 

[square1]

In the immortal words or The Steve Miller Band, "Go on, take the money and Run!"

 

[Toyboy]

This question is for you to determine, everyone's answers only deal with our little piece of the big picture. Your savings, health ins, pensions, 401k, lifestyles are different and we made the decision on those factors and more.

Now, that being said, I retired at 51 w/pension and healthcare, took SS at 62 and have never looked over my shoulder. At 65 my company health care went away (that was a known when I retired) and I went on Medicare and former employer gives each of us $3,500 each year to spend on supplemental ins or anything healthcare related. My wife took an early out and has a pension also.

We've done very well all these years since retirement, and we weren't really thrilled to have to take the mandated withdrawals this year. Good case for switching to a Roth years ago. Too late for that now.

In short, Life is Good

 

[bullbreaker]

In the immortal words or The Steve Miller Band, "Go on, take the money and Run!"

Yup ! And in the words of MERLE HAGGARD (co written with Dean Holloway) from Big City !

"Been working everyday since I was twenty
Haven't got a thing to show for anything I've done
There's folks who never work and they've got plenty
Think it's time some guys like me had some fun

So, turn me loose, set me free
Somewhere in the middle of Montanna
And gimme all I've got comin' to me
And keep your retirement
And your so called social security
Big city, turn me loose and set me free "

Tomorrow is not guaranteed to no one , I got six and a half more years to go till I reach 62 . I plan on grabbing mine at 62 .

 

[zzvyb6]

Why would you want to buy life insurance ? Your home ought to be paid for, your children ought to be grown up and left the house, your spouse will be covered by Medicare and your estate ought to be able to afford a health care supplementary policy or two for them and continue to pay taxes.

What's left to need a lump sum of cash (oh, Their death was by natural causes, that's not covered) ? My financial advisors told me to drop the LI payments as a waste of money. It was a big drop in payoff as I turned 62 anyways (by a factor of 10) anyways. Instead, buy an Assisted Living policy unless you don't mind your nursing home bed sheets being changed once a year. Make living easier and better, not dying !

 

[Travelover]

Have you looked into your survivor benefits? If you have a spouse that is considerably younger than you, or is expected to live quite a while after you go, you may want to postpone taking SS until later years. Do some research and see if it applies to your situation.... SS survivor benefits.

I want to make sure my wife is covered after I die, so she will take it at 62, I will take spousal (half her amount) at 66, then take my full at 70. When I die, she gets my amount. If she should die first, I'd still get the higher amount.

 

[RedNeckGeek]

According to this article, the Social Security Trust fund will be broke in 2033. It also states that if you wait until you're 70 to claim your benefit, you'll make more than if you claim them at 62, but only if you live past age 82.

http://www.fool.com/ecap/the_motley...ource=eiifb7410000032&wsource=esafbwdg0000028

So let's do a little math.

I'll be 82 in 2039, the year when the total amount of benefits collected is equal for start ages of 62 and 70.

Benefits get cut when the trust find goes bust in 2033, resulting in a 25% cut in payments. That's 18 years from now when I'll be 76.

I'll be 70 in 2027, 5 years before the cut. If I wait to collect 'till age 70, I'll get a bigger payment, but will collect it for only 5 years.

I'll be 62 in 2019, and by the time the bust cut rolls around I'll have been collecting benefits for 14 years, but the age 70 benefit will be 76% larger than what I would have collected if I'd started at age 62.

So for example, say my age 70 benefit was 1760/month. I'd get 12 x $1760 x 5 = $105,600 before the bust.

My age 62 benefit would be $1000. I'd get 12 x $1000 x 14 = $168,000 before the bust. That's almost half again as much.

After the bust, it's only 6 years until I'll be 82, and according to the article I'll have collected the same amount for each start age. Let's see:

For a start at age 70, I'd collect $105,600 + ((12 x $1760 x 6) x .75) = $200,640.

For a start at age 62, I'd collect $168,000 + ((12 x $1000 x 6) x .75) = $222,000, or $21,360 more.

At an additional $760/month, it'll take another 28 months for the two totals to equal, and I'll be more than 84 years old. Seeing as how both my parents died well before their 84th birthday, and I have little faith that the existing benefits schedule will stay the same until I'm 62 let alone 70 (they've already raised the qualifying ages several times), I think I'd rather go for the bird in the hand and start collecting benefits ASAP.

 

[jeff9366]

Social Security was not subject to Income Tax until the Vietnam War, when LBJ made it 85% taxable.